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China's corona policy is weakening the global economy - and also causing prices to rise here

2022-04-26T14:46:14.253Z


China's corona policy is weakening the global economy - and also causing prices to rise here Created: 04/26/2022, 16:43 By: Sven Hauberg In the port of Shanghai - here is an archive picture from 2021 - not much is going on at the moment. © Chinatopix via AP/dpa Lockdowns without end: China's anti-corona measures are burdening the global economy - and will probably also lead to rising inflation


China's corona policy is weakening the global economy - and also causing prices to rise here

Created: 04/26/2022, 16:43

By: Sven Hauberg

In the port of Shanghai - here is an archive picture from 2021 - not much is going on at the moment.

© Chinatopix via AP/dpa

Lockdowns without end: China's anti-corona measures are burdening the global economy - and will probably also lead to rising inflation in our country.

Munich/Shanghai/Beijing - China's government is sticking to its zero-Covid policy - despite all the effects on the population suffering from the tough measures.

After Shanghai was put into a lockdown at the beginning of April, concerns about far-reaching curfews are now also spreading in the capital Beijing.

China's tough course has long had consequences for the global economy.

In March, the Chinese government set a target of just 5.5 percent economic growth for the current year - "a really ambitious target and one that will be very difficult to achieve," according to analyst Nis Grünberg from the China think tank Merics recently said.

The many lockdowns - more than 70 cities across the country have been affected by more or less strict curfews since March - do not make the situation any easier.

You can see this most clearly in Shanghai - or in the port of the economic metropolis and in the adjacent sea.

Data from the MarineTraffic site shows hundreds of container ships stowed there.

According to estimates, the export volume of the world's largest port has already fallen by around 40 percent.

"A supply chain only works when all links work together evenly," Tu Le, managing director of mobility consultancy Sino Auto Insights, told the

South China Morning Post

.

“This includes the workers at the manufacturers and suppliers and the truck drivers on the inbound and outbound side.

If one of these links fails, the entire system can function slowly or not at all.”

Sometimes a single positive corona case is enough for the authorities to send a city into lockdown, such as in the industrial city of Wuhu in Anhui province.

The supplier Foxconn, which supplies Apple, among others, stopped production at two factories in the eastern Chinese city of Kunshan earlier this week after new Covid cases were reported there.

China: Lockdown in Shanghai leads to delivery bottlenecks worldwide

"The delivery bottlenecks will now also be felt in Germany," said Maximilian Butek, the delegate of German business in Shanghai, a few days ago to the dpa news agency.

Butek fears that the effects of the lockdown on global trade flows will also make many products more expensive in Germany and thus lead to inflation.

According to Butek, many companies have not been able to get their products out of China for more than three weeks.

There are hardly any alternatives to transporting goods by ship.

The plane is too expensive and the rail connections between Germany and China are also interrupted.

At the beginning of the year, around 60 freight trains from China arrived in Duisburg, the German terminus of the New Silk Road, but the number is currently around 30 percent less - and the trend is falling.

"We assume that traffic could drop to 40 to 50 percent of the previous volume," said Markus Bangen, head of the port operator Duisport, the

Süddeutsche Zeitung

.

The reason: the rail connections between China and Germany mainly run through Russian territory.

Because of the war in Ukraine, however, many producers "would not want to transport the goods via Russia," said Bangen, although rail transport has not yet been affected by western sanctions against Moscow.

In Shanghai itself, the authorities recently allowed 666 important companies - including Tesla and China's largest chip manufacturer SMIC - to start production again.

However, only around 70 percent of these companies had done so by Sunday, according to Chinese media reports.

The reasons for this are diverse.

For example, Tesla was waiting for batteries to be delivered last week, which is why the construction of electric cars could not initially be resumed.

China: Company employees must sleep on company premises

In addition, the government requires that the employees of the 666 companies sleep on the company premises and have no contact with people from outside.

However, many companies are not able to offer their employees enough sleeping places, which is why they often stayed at home instead of working.

"A large number of workers are still locked at home, and capacity will not be fully utilized until all technicians and workers return to plants," an employee at auto parts supplier ZF TRW told the

South China Morning Post

.

The long and hard lockdown in Shanghai and other Chinese cities is meanwhile leading to a rethink among many foreign professionals in China.

While the country was previously a place where people could earn good money and live comfortably, the downside of the Chinese dictatorship is now obvious.

Anyone who is locked in their apartment or taken to an overcrowded quarantine camp sees China differently.

In March, a survey by the US Chamber of Commerce found that more than 80 percent of companies are currently struggling to attract foreign workers to work in China.

A third of the companies have also reduced their foreign workforce in China by at least ten percent.

According to figures from last year, around 164,000 foreigners live in Shanghai.

Jens Hildebrandt from the German Chamber of Commerce Abroad in Beijing warned the AFP news agency that the lockdown measures would “leave long-term traces”.

In the meantime, many people in Europe have also recognized that dependence on China can be dangerous.

"The European discussion of its own dependencies on China has evolved through a series of 'wake-up calls' or moments of revelation about national and European relations with China," says a recent report by the European think-tank Network on China.

"The Covid-19 pandemic in particular has been an important turning point in the public debate on dependency, vulnerability and resilience."

China: Stock markets crash

The lockdown in Shanghai is also having an impact on the stock exchanges.

On Monday, the Shanghai Composite stock index fell more than 5 percent to its lowest level in two years.

Beijing had actually set the goal of turning Shanghai into an "international financial center with major global influence" by 2035.

According to an analysis by the Financial Times, this is not only opposed to the free flow of financial flows and information - but increasingly also to Chinese corona policy.

This makes it difficult for foreign companies to bring staff - and thus money - to China.

According to the analysis, the lockdown has also shown that, when in doubt, domestic political decisions are more important for the Communist Party than the interests of business representatives.

In fact, the party hardly seems to be able to deviate from the course it took more than two years ago - despite all the economic side effects.

The idea of ​​the zero Covid strategy is personally attributed to head of state and party leader Xi Jinping, a change would make the 68-year-old, who wants to start a historic third term in autumn, appear fickle.

By sticking to the zero-Covid policy, Beijing wants to prove one thing above all: the alleged political and moral superiority of the Chinese system, which has managed to prevent hundreds of thousands of corona deaths, while Western democracies do not care about the lives of their citizens may be.

At least that's the narrative that state media have been spreading for months.

The immense suffering that the endless lockdowns bring to people plays only a minor role in these considerations.

And even economic growth, so far one of the most important sources of legitimacy for the party dictatorship, apparently has to take a back seat.

(sh)

Source: merkur

All news articles on 2022-04-26

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